HomeTechUK firms may be barred from funding emerging tech in hostile countries

UK firms may be barred from funding emerging tech in hostile countries


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Ministers are considering blocking British investors from funding emerging technologies in hostile countries if they believe the technology could pose a threat to UK security, the deputy prime minister has said.

Oliver Dowden said on Thursday the government would consult on curbing British investment abroad, after becoming concerned that money from the UK could be used to finance projects that could undermine national security.

His comments come eight months after the Biden administration gave regulators the power to stop US investment in Chinese institutions in three sectors: semiconductors, quantum computing and artificial intelligence.

In a speech at the Chatham House thinktank, Dowden said: “A careful review of the evidence suggests that it’s possible that a very small proportion of outbound investments could present national security issues. Indeed, they might be fuelling technological advances that enhance military and intelligence capabilities of countries of concern.”

He added: “We have a problem here that we should look at … in a very small number of very critical areas where we actually believe that outbound investment from the United Kingdom could facilitate significant enhancements in adversarial cutting-edge capability in a way that may be detrimental to the United Kingdom.

“It is that sort of very precise area of intervention that we’re looking at.”

Pushed to say which countries he would consider a risk, the deputy prime minister said: “We set out into the integrated review refresh that China was the number one state-based threat to our economic security.

“So I’m not blind to the fact that a lot of this will relate to China but equally it will relate to hostile states such as Iran, Russia and North Korea.”

Dowden’s speech comes at a sensitive time for UK-Chinese relations. The government has shifted its stance towards Chinese technology in recent years amid growing international concern that equipment supplied by companies such as Huawei could be used for espionage.

The prime minister, Rishi Sunak, has attempted to reset fractious relations with Beijing in recent months, but that effort was dealt a blow last month when it emerged Chinese hackers were behind cyber-attacks on politicians and the Electoral Commission.

Dowden said on Thursday: “Our open economy is being targeted by state-based actors and their proxies across our inbound and outbound investment flows, our imports and exports and academic collaborations.”

But in contrast with the more hawkish US rhetoric on Chinese investment, he also insisted: “We are open for business and my priority and presumption will always be in favour of investment.”

The deputy prime minister singled out universities as particularly at risk of being manipulated by foreign governments, both because their researchers were likely to be targets and because academic institutions were so open to international investment.

Last month, the Financial Times revealed that academics at Imperial College London had worked with scientists at institutions linked to the Chinese military on research with potential military applications.

Dowden said he was summoning university vice-chancellors for a briefing on the kinds of technological threat to guard against.

“We should be proud that much of the cutting-edge development in sensitive technologies is happening at our universities,” he said but added this could be a security risk.

“We must ensure that universities’ reliance on foreign funding does not become a dependency” through which they can be “influenced, exploited or even coerced”.

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